Thursday, January 07, 2010

Jan. 7 (Bloomberg) -- The number of Americans filing first- time claims for unemployment benefits rose less than forecast last week from the lowest level in more than a year, indicating jobs cuts are waning as companies become more confident in the economy.

Initial jobless applications increased by 1,000 to 434,000 in the week ended Jan. 2, fewer than the 439,000 claims economists anticipated, Labor Department figures showed today. The number of people receiving unemployment insurance dropped in the prior week to 4.8 million, and those receiving extended benefits increased. Improving sales and production gains are prompting companies to slow the pace of firings as the economy recovers from the worst recession since the 1930s.

“This is clearly a strong number,” said Maxwell Clarke, chief U.S. economist at IDEAglobal in New York, who forecast claims at 435,000. “Looking forward, you should see slow and steady improvement and a return to positive payroll numbers.” The four-week moving average of initial claims, a less volatile measure, fell to 450,250 last week, the lowest since the Sept. 13, 2008, from 460,500 the prior one (see chart above). Claims have fallen 36% since reaching a 26-year high of 674,000 in the week ended March 27.

15 Comments:

That initial number is misleading in that it ignores the existing base of unemployed. It only says that there's been a slowing loss, not necessarily a gain.

I want to see a recovery as much as you want to demonstrate one, but I'm not wanting one that's statistical and thus jobless. When the unemployment numbers like the U-6 go down in an honest (read: people actually getting permanent jobs) way, then I might be inclined to say that there is a recovery.

Whenever I hear anyone start commenting about the "real" nature of the U-6 Unemployment number, and about "discouraged workers," I have to ask: How are these people surviving? If you can quantify for me how these people are living day-to-day, I'd appreciate it.

While you're at it, please describe to be how someone who was previously a breadwinner in a family becomes a "discouraged worker?" Isn't it incumbent on that breadwinner to make every human effort possible to find and secure work and paying income?

These are the most unfortunate of America's 14.5 million jobless: the ones whose benefits are drying up — in some cases after a record 18 months of government support.

With savings depleted and job opportunities scarce, people .... are living with relatives and borrowing cash from friends. They are even skipping meals. Through it all, they are trying to stay positive through exercise and prayer.

Donald Money has already moved in with his elderly parents, stopped going to the movies and started using less of his prescription medication so it will last longer. Money and others like him are scrambling to find work before the government safety net is taken away.

Whenever I hear anyone start commenting about the "real" nature of the U-6 Unemployment number, and about "discouraged workers," I have to ask: How are these people surviving? If you can quantify for me how these people are living day-to-day, I'd appreciate it.

I would not imagine that it would be a good existence. Secondly, they'll have the issue of being marked as long-term unemployed, which makes things worse off.

If someone is unemployed but a home owner, the foreclosure process is taking a year (or longer at this point) to actually kick them out of their house. It's amazing how far an unemployment check would go if you didn't have to pay for shelter.

Personally, I was laid off in June, went a month without work, but still paid the mortgage. UE benefit was less than half my regular salary and with car/mortgage/four mouths to feed, it wasn't easy. But, if I just had to pay for food I would have been fine and not had to dip into savings.

As Seth said, not a great life, but a doable one.

With as many homes out there that are being squatted in, you can bet this is happening a lot.

Isn't it amazing, Bobble, how initial claims keep going down and down while payroll employment keeps going down and down?

Which indicator are we supposed to believe, the one where people must actually be ELIGIBLE and CHOOSE to be counted or one where all people are actually counted?

Initial claims are going down because the pool of eligible people is declining. The pool excluded people who have not had earnings in the past X months (depending on the state). If a person loses a job, goes on unemployment, finds a job and then loses that one they will likely be ineligible for benefits because they didn't work in their most recent job long enough.

Until we being to see payroll employment ceasing its decline, the recession isn't over because that is an important coincident indicator. And until broader measures of labor underutilization start to show decline, we cannot validate recovery.

What do the discouraged workers do to survive? Mooch off family, deplete savings, sell their assets, or simply drop out of the labor force and fire their nannies.

These numbers go up and down, but it's clear there are going to be more jobless and unemployed than there are job openings and it's time more got resourceful and looked outside the conventional job model for income creation.